Table of Contents
The National Institute of Credit Administration (NICA) has expressed concerns regarding the adverse effects of restricted access to credit on business expansion, production capabilities, and the escalation of poverty levels across Nigeria.
In a recent statement, NICA highlights the importance of a well-functioning consumer credit system, which facilitates the acquisition of goods and services on credit, thereby reducing dependence on cash transactions.
Join our Telegram Channel for Updates
This system enables individuals to finance urgent and significant projects, stimulates domestic production, and fosters economic growth.
The statement reads:
“In the country, consumer credit has been bedeviled by challenges such as the demand for collateral by the lending institutions, which many of the SMEs lack, the unwillingness of banks to give out long-term loans, and high-interest rates, among other challenges.
These have hindered the dreams of many ambitious entrepreneurs and regular salary earners from expanding their businesses or acquiring other household items. It has also worsened financial inclusion, most especially at the grassroots.
Poor credit access hinders business growth, reduces production capacity, and adds to the poverty level in the economy. To support the growing economy and unlock Nigeria’s economic potential, credit availability should be prioritized.”
NICA emphasizes the critical role of an effective consumer credit system in fostering economic growth by enabling individuals to purchase goods and services on credit, thereby reducing the need for cash transactions.
However, the path to acquiring consumer credit in Nigeria faces challenges such as stringent collateral demands, reluctance of banks to offer long-term loans, and high-interest rates.
These challenges have impeded the ambitions of entrepreneurs and income earners, deepening financial exclusion, particularly in grassroots communities, according to NICA.
The institute stresses the importance of making consumer credit services accessible to a broader population segment, including the informal sector, low-income earners, artisans, and SMEs, aiming to enhance the resilience and growth of the Nigerian economy.
In light of the recent increase in the monetary policy rate (MPR) by the Central Bank of Nigeria (CBN), NICA acknowledges the government’s commitment to improving the country’s credit system.
The collaboration with NICA to develop a consumer credit framework and the earmarking of an N100 billion Consumer Credit Fund in the 2024 national budget demonstrate the government’s efforts to stimulate economic growth and enhance the welfare of the populace.
